By Louise Egan and Randall Palmer
OTTAWA May 2 Canada tapped an outsider on
Thursday to head its central bank, bringing in the
well-respected head of the Canadian export credit agency, who
immediately stressed the need to nurture a choppy economic
Incoming Bank of Canada Governor Stephen Poloz, 57, worked
at the central bank for 14 years earlier in his career. But he
has spent the last 14 years at Export Development Canada.
Poloz takes over as central bank chief on June 3 when Mark
Carney leaves, a surprise for markets, which had tipped Carney's
senior deputy Tiff Macklem as the most likely choice. Carney
becomes governor of the Bank of England on July 1.
In his debut with reporters, Poloz was careful not to
contradict the views that Carney and the central bank expressed
in their quarterly economic report last month.
"We are in a recovery that is not as vigorous as would
normally be expected and ... I think it will be necessary to
nourish it, I don't know for how long," Poloz said in an
introductory news briefing in Ottawa.
Canada's economy recovered well from the 2008-09 recession
thanks to aggressive government spending, tax cuts and
record-low interest rates. But growth stalled last year, with
the economy recording its slowest two quarters of growth since
The Bank of Canada has kept its key rate on hold at what it
describes as a stimulative 1 percent since 2010. But it has
signaled for the past year that the next move will be a rate
hike, not a cut. [ID: nL2N0D40HM]
Poloz said exports now needed to fuel the Canadian economy,
and he believed this was already starting to happen. Canada
unexpectedly recorded a trade surplus in March, the first
monthly surplus after a year of deficits.
"In my judgment, it's looking promising. I hope you agree
with that," he said, turning to Carney, who smiled broadly:
"Yes, absolutely," Carney replied.
Analysts do not expect Poloz to rethink central bank
policies, especially because of his experience working there
earlier in his career. The bank, which guards its independence
jealously, targets inflation of 2 percent, but has said it will
be flexible with the timeline for reaching that target in
difficult economic times.
"The move was a surprise, but I don't look for any change in
monetary policy," said Craig Wright, chief economist at Royal
Bank of Canada.
Unlike the U.S. Federal Reserve or the Bank of England,
there are no discernible "hawks" or "doves" among the Bank of
Canada's six governing council members because the council
reaches decisions by consensus and takes pains to speak from a
common script at public appearances.
Poloz will serve a seven-year term.
In a Reuters poll on April 10, Poloz was seen as the second
most likely candidate to get the job after Macklem.
Poloz appeared upbeat about signs of gradual cooling of the
once-hot Canadian housing market and a slowing in record-high
household debt levels in Canada - both top concerns of Finance
Minister Jim Flaherty.
"Of course it's a concern in the sense of where we are,"
Poloz said. "However, the evolution appears to be constructive,
and I think that's great, for us to continue to watch that and
to, if you like, nurture that process of a return to more normal
Economists have said Poloz has the credentials to succeed as
governor and that he was viewed as a governor-in-waiting in his
previous period at the central bank.
He is a good communicator, described by one person as
"folksy" in his speeches but also whip-smart. He worked at a
private-sector financial research firm in Montreal for five
years after leaving the central bank.
Poloz joined EDC, a quasi-independent organization that
provides loans to importers of Canadian goods, in 1999 as its
chief economist and became president of the agency in 2010.
One possible strike against him was the perception among
some market players that he may be more sympathetic than his
predecessors to exporters' complaints about the strong Canadian
dollar and lean towards a weaker currency.
RBC assistant chief economist Paul Ferley dismissed that
"This would do a disservice to Poloz's early career at the
central bank where the priority is to set monetary policy to
achieve an appropriate rate of inflation," he said.
Poloz will have only about a month to transition to his new
role, much shorter than the four months Carney had between his
appointment in October 2007 and his first day of work in
This is the third time in a row that the top job at the Bank
of Canada has gone to an outside candidate rather than to the
most senior internal policymaker, in this case Macklem.
Macklem said in a statement that he would stay with the bank
and looked forward to working with Poloz.